Drug delivery system for Montana Medicaid Program, Department of Public Health & Human Services : limited scope review PDF
Preview Drug delivery system for Montana Medicaid Program, Department of Public Health & Human Services : limited scope review
S Montana* L37521cf•d7m2ni32LLee8giisfiialattiuvree*Audit 1896 Drue delivery systen for Montana Medicaid ProArant Department oiA^KisI1ata*ive Aaudji*t^ "DMi^*vi•si• on State ofMontana Report to the Legislature Limited Scopc Rcvicw September 1996 Medicaid Partnership Plan Drug DeKvery System for Montana Medicaid Program Department ofPublicHealth & Human S^rices This report discusses department procedures foravertingcosts inthe acquisition and delivery ofdrugs. srm DocuMc:iTs collect;on JAN -e 1597 MONTANA STATE LIBRARY 1515 E. 6th AVE. HELENA, MONTANA 59620 O^. "I^-Lj;.' feWixi? -fi i '^^ Directcomments/inquiries to: LegislativeAudit Division Room 135 State Capitol PO Box 201705 MT Helena 59620-1705 96P-12 MONTANASTATELIBRARY 3 0864 0009 8036 LIMITED SCOPE REVIEW Thislimitedscopestudywasajointprojectperformedbyperformanceauditstafftolookforcost savingsopportunities inthestate's Medicaidsystem. Thisreview alsoutilizedtechnicalsupport from federal auditpersonnel made availablethroughtheMedicaid Partnership Plan. Legislative AuditDivision Room 135 State Capitol PO Box 201705 HelenaMT 59620-1705 MEMBERSOFTHE LEGISLATIVE AUDITCOMMITTEE . [Montana \ Logislati,vO Legislative Audit Division Branch ScouA. Seacat, LegislativeAuditor June 1996 The Legislative Audit Committee ofthe Montana State Legislature: This is our limited scope review ofthe Department ofPublic Health and Human Services drug delivery system for the Medicaid program. The report identifies steps the department has taken to contain costs inthis program. Thedepartment's written response is included begirming on page 11 I would liketo thank the department director and his staff, as well as the staffatthe Employees Benefit Bureau at the Department ofAdministration, fortheir assistance and cooperation during our review. Respectfully submitted. AzW^^^ Scott A. Seacat Legislative Auditor Room136.SftaCapitolBuilding POBox201706 HelenaMT69620-1706 Phone406-444-3122 FAX406-444-9784 Table of Contents Appointed and Administrative Officials ListofFigures Drug Delivery System Introduction for Montana Medicaid Program Objectives Scope . . Background Current Delivery System . . Point ofSale System . . . Due Care Program Drug Formulary Program Summary . . Conclusion: Department Procedures have Contained Costs Other Considerations . . Manufacturer Rebates Would Mail Orderbe a Feasible Delivery Option? 6 Other States Delivery System 6 Comparison to Other Delivery Systems 7 Conclusion: Feasiblebutnot Necessary 8 Agency Response Department ofPublic Health & Human Services 11 Appointed and AdministrativeOfficials Department ofPublic Peter Blouke, Director HeaHh & Human Services Nancy Ellery, Administrator, Medicaid Services Division Mary Dalton, Chief, Primary Care Bureau Page i List ofFigures Figure 1 Total CostsComparison Medicaidvs. MontanaEmployeeBenefitPlan Pageii . Drug Delivery System for Montana Medicaid Program Introduction WeperformedalimitedscopereviewofMontana'sMedicaid delivery systemforthepharmacy program. The Medicaid program isadministeredbythe DepartmentofPublic Health and Human Services. Objectives Ourprimaryobjectiveswereto: 1 Identifythedepartment'sproceduresto achievecostsavingsfor intheacquisitionand deliveryofdrugs. 2. Determineifamailorderdeliverysystemwouldbemorecost effective. Weconductedthisreviewincooperationwith federal auditorswho providedtechnical supporttousundertheMedicaidPartnership Plan. ThePartnershipPlanoutlinessuggestedfederal andstatejoint auditsoftheMedicaidprogramwhichhavesavedmoney inother states. Scope Thescopeofthisreviewwaslimitedto reviewingthedepartment's Medicaidpharmacyprogramexpendituresandtheproceduresused to deliverdrugsto recipients. Wecomparedthedelivery system usedforthecurrentMedicaidpharmacyprogramtootherstate pharmacydrug delivery systems. Wedidnot reviewall expendituresforpharmacysupplies, nordid wereviewtransactions totheextentnecessaryto identify unnecessarycostsormethodsused bythedepartmenttoacquiredrugs. Wedid notexaminethe efficiencyofcurrentprocedures. Ourreviewwasconducted in accordancewith applicableGovenmient AuditStandards. Background TheMedicaidprogram, administeredunderfederal regulations, servespersonswhoqualifyforfinancial and medical assistance. Thisprogram isadministeredbythe Medicaid ServicesBureau withinthe DepartmentofPublic Health and Human Services. The programmissionistoensurethatMontana'slow-incomeresidents Page 1 Drug Delivery System for Montana Medicaid Program haveaccesstomedical careatacostwhich isequitabletoboththe provideroftheserviceandtothetaxpayer. Programfunding includesgeneral fund, statespecial revenue, and federal funds. Statespecial revenue ispropertytax revenuefromthe 12 state-assumedcounties, nursinghomebedtaxes, anddonations. Countyfundssupplypartofthestatematchforprimarycare Medicaidbenefits. Programexpendituresforthepharmacyprogramwereapproxi- mately $25 million instatefiscal year 1993-94and $27 millionin statefiscal year 1994-95. Drugbenefitsareoneofthefastest growingcomponentsofprimarymedical care. Reimbursementfor covereddrugsundertheMontanaMedicaidProgram isthelessorof: - Theprovidersusualandcustomarycharge. ~ Theestimatedacquisitioncost(plusadispensingfee). ~ Amaximumallowableamountbasedonadefmedcostlimit, (plusadispensingfee.) CurrentDelivery System ThecurrentdeliverysystemusedbyMedicaidoperatesthroughlocal pharmaciesacrossthestate. Toaddresstherisingcosts inthisarea, thedepartmenthasdevelopedseveral differentprogramswith variouscontrols inplacetoavertcosts. TheseincludePointofSale System, DueCareProgram, DrugFormularyProgram, andthe ManufacturerRebatesProgram. PointofSaleSystem ThePointofSaleSystemisanon-linecomputersystemforMedicaid pharmacyproviderswhichprovidestimelyMedicaideligibility confirmation, notifiesifpriorauthorizationisrequiredandprovides anelectronicsystemtosubmitclaims. Thisprogramisadministered throughacontractwithaprivatecompany. Thepointofsalesystempromotestheuseofgenericorcheaper brandnamedrugsby indicatingpricedifferenceson-lineasa prescriptionisentered. Insomecases, genericsaremandatedand thesystemalsocommunicatesthis. Potential drug interactionsare also noted. Alargemajorityofthepharmacies inMontanacurrently subscribetothissystem. On-lineeditswithinthesystemprovide Page2 Drug Delivery System for Montana Medicaid Program prospectivedrugutilization reviewstopromoteprogram compliance. Thedepartmentpays29cperprescriptionforthisservice. The departmentexpendedapproximately $290,000forthisprogram in thepastyear. Drugcostswerecontainedby variousprescription changes identifiedthroughtheprogram. Forexample, 628 prescriptionswere reversedduetodrug interactionalerts highlighted. Another 1,711 prescriptionswerereverseddueto excessivedurationalerts. Projected reduction inprescriptioncosts were$308,701 incalendaryear 1995. DueCareProgram Thepurposeofthisprogramisto identifypatientprofileswhich demonstrateapotential forhealth risksduetoprescribeddrugs. Notedtrendsorproblemareasarethencommunicatedtohealthcare providerstopromotemore informeddecisionmaking. Areas trackedmay includedrugconflicts, underuseoroveruseof medications, likelihoodofadverseoutcomes, andrelativeriskof hospitalization. Thisprogramisprovidedjointlybytwocontracted entities: apeer-revieworganizationandapharmaceutical careand researchgroup. Contractamountsforatwoyearperiodare $317,265 and$200,456, respectively. Programoutcomeinformation isprovidedtotheDueCareBoard. (Thisboardalso servesastheMedicaidFormulary Oversight Committee, which isdiscussedlater inthisrepon.) TheDueCare Boardincludesthreepharmacists, threephysicians, andone additionalpharmacistwhoservesasaliaisonbetweentheboard, the department, and industry. Theboardfunctionsasanadvisorygroup tothedepartment. Approximately 250 recipientprofilesare reviewedeach monthbytheboard. Six monthsafterreview, each profile isre-evaluatedandanactual costsavingsiscomputedfor each case. Basedonreviewscompleted infederal fiscal year 1994, thedepartmentsaved$270,053 inprogramcosts. Pages Drug Delivery System for Montana Medicaid Program DrugFormulary Program Aformularyisalistingofproductseligibleforcoverageundera particularreimbursementprogram. Priortotheapplicationofthe MontanaMedicaidformulary, theformularyforMontanawas consideredopen. Veryfewproductswereexcludedorwerelimited incoverage. Formulariesareestablishedforvariousreasons, includingto definecoverageforthosedrugswhichprovide therapeuticallysoundtreatmentwhilemaintainingcosts. An efficientlymanagedformulary isamethodforreducingMedicaid pharmacyprogramcosts. TheUniversityofMontana-Missoula, School ofPharmacyand AlliedHealth Sciences, performresearchonindividual drugsand therapeuticclassesofdrugstorecommendinclusionorexclusion fromtheMontanaMedicaidformulary. Thedepartmentcontracted withtheUniversityfortheamountof$78,522forthisservice. The Schoolbasesitsdeterminationsonadrug'slabelingorrelated medicalliterature. Drugsreconmiendedforexclusionarefoundto havenosignificantadvantage intermsofsafetyoreffectivenessover otherdrugsevaluatedandrecommendedforinclusioninthe MontanaMedicaidformulary. TheMedicaidFormularyOversightCommitteeisresponsiblefor reviewingrecommendationsmadebytheUniversityandsubmitting final recommendationstothedepartmentforinclusionorexclusion intheMontanaMedicaidformulary. Asnotedonpage3, this committeeincludespharmacistsandphysicians. Committeecostsare approximately $5,000annually. Thiscommittee isresponsiblefor ensuringcompliancewithfederal mandates. Final recommendations areincorporatedintothePointofSalesystemtoensurenotification toparticipatingpharmaciesandpromoteprogramcompliance. Due totheadditional controlsandcompliancereviewsofferedthrough theuseofthisprogram, thedepartmentestimatedexpenditureswere reducedbyapproximately $400,000annually. Thissavings is primarilyfromreviewofpreviousandcurrentexpendituresforthose highcostdrugswhich nowrequirepriorauthorizationbefore submittingclaimsforpayment. Forexample, a50percentreduction inexpendituresforTordal, ananalgesicdrug, wasnotedbetween fiscal years 1994and 1995 afterpriorauthorizationwasmandated. Page4
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